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[February 06, 2013]
A private Dell will operate freely [Boston Herald]
(Boston Herald (MA) Via Acquire Media NewsEdge) Feb. 06--Dell's decision yesterday to go private in a $24.4 billion buyout will allow the company to reinvent itself without the pressures and scrutiny that go along with being a public company, analysts told the Herald.
Founded and run by Michael Dell, the company rose to become one of the world's largest personal computer makers in the 1990s, but the PC industry is in "major upheaval" as people move increasingly to smartphones and tablets, said Brent Bracelin, an analyst at Pacific Crest Securities.
"Today, Dell sells enterprise software and services," Bracelin said. "As a private company, they can accelerate the transition to becoming a true enterprise supplier, and their success will be measured over years, instead of quarters. You have a much more patient investor base. In the short run, it might suppress profitability. But in the long run, there could be more value created." The announcement of the deal, which will end a turbulent 24 years for Dell as a public company, sent its stock up 1.13 percent to close at $13.42.
Investors will be able to sell back their stock for $13.65 per share -- below Morningstar's fair value estimate of $14, but well above the $8.69 the stock hit a low at on Nov. 16, analyst Carr Lanphier said.
Over the past five years, Dell has spent about $10 billion on acquisitions because it wanted to get into software so that it would be more of a one-stop shop and generate higher margin sales, Lanphier said, but it's unclear if those acquisitions helped because they coincided with the recession.
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